Almost two years in the making, three regulators have offered a first look at what the Volcker rule—barring banks from proprietary trading and strictly limiting their alternative investments—will actually look like.

The Federal Reserve, Federal Deposit Insurance Co. and the Office of the Comptroller of the Currency released the 298-page proposal yesterday. The new rule, set to be considered by the Securities and Exchange Commission today, would in fact bar proprietary trading outright and limit banks to a maximum 3% stake in hedge funds and private equity funds.

The restrictions won't come into effect until June, and aren't final. Indeed, the proposal offers some 400 questions to industry groups—including one that could signal an even tougher approach than that outlined in the proposal.

Currently, the Volcker rule would be softened by a hedging exemption. The regulators have asked for comment as to whether that might "create the potential for abuse."

Many other aspects of the proposed rules still require firmer definitions—including "bank"—that the comment period will assist with.

Critics for the vague proposal could be found on both sides. Some say the rules don't go far enough; others warn that it will drive business to foreign banks and could cut bank profits by a quarter.

Editor's Note

In our new section, FINtech Focus, we will profile one of these firms each week. While fintech is a broad category, we will be focusing on firms that specifically cater to the alternative investment industry. Read more…